Reed Hastings, the American entrepreneur and co-founder of Netflix, boasts an impressive net worth of $5 billion. He has accumulated wealth through his leadership roles at Netflix, where he serves as the Chairman and CEO. As of the latest SEC filings, Reed holds 5.2 million shares in Netflix, including options. His net worth peaked at $7 billion when Netflix stock was soaring.
Reed was part of Facebook’s board of directors from 2011 to 2020, despite never being a user of the platform. In fact, Reed has openly described social media as his “idea of hell.” Additionally, Reed served on the board of Microsoft from 2007 to 2012.
Salary Breakdown
Reed Hastings’ base salary at Netflix stands at $650,000, a significant reduction from the $3 million he earned during his peak years between 2010 and 2014. Reed has consistently chosen to reduce his salary voluntarily, even during prosperous years. For instance, he lowered his base salary from $700,000 in 2019 to $650,000 in 2020. When factoring in bonuses, stock awards, and other forms of compensation, Reed’s total earnings are much higher. In 2020, he earned around $33.4 million beyond his base salary. In 2019, this total was $31.5 million, and in 2018, it reached $29.4 million.
Early Life of Reed Hastings
Reed Hastings, born on October 8, 1960, in Boston, Massachusetts, grew up with his father, who was an attorney for the Department of Health, Education, and Welfare under the Nixon administration. After high school, Reed spent a year selling vacuum cleaners door-to-door before attending Bowdoin College in Maine. His initial plan was to join the Marines after graduation, but he changed course and opted to join the Peace Corps instead.
During his time in the Peace Corps, Reed taught math in Swaziland. Reflecting on his experience, Reed once said, “Once you have hitchhiked across Africa with $10 in your pocket, starting a business doesn’t seem too intimidating.” This period was pivotal, leading him to apply to graduate schools. Though he was rejected by M.I.T., he was accepted to Stanford, where he graduated in 1988 with a master’s in computer science.
Career Beginnings with Pure Software
After completing his studies, Reed Hastings worked briefly for the oilfield services company Schlumberger, followed by a role as a software developer at Adaptive Technology, focusing on debugging software. In 1991, Reed co-founded his first company, Pure Software, at the age of 31. The company’s initial product was Purify, a debugging tool for Unix/C engineers.
Pure Software went public in 1995 and, a year later, merged with Atria to form Pure Atria Corporation. This new company was acquired by Rational Software for $750 million, marking the largest acquisition in Silicon Valley history at that time. Though Reed was appointed CTO of the combined company, he soon left after the acquisition.
With a bit of money and plenty of time to reflect, Reed began thinking about his next big venture. That year, in 1997, he co-founded Netflix.
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The Founding of Netflix
Reed Hastings is widely known for founding Netflix, but the story behind the idea is equally fascinating. Reed has recounted that he came up with the idea after incurring a $40 late fee at a Blockbuster rental store for returning the movie “Apollo 13” six weeks late. During that time, he could not find the missing cassette, and while at the gym, he had a realization about the potential of a subscription-based movie rental service. He saw how the gym’s flat-rate monthly fee was more convenient than paying for each movie rental, and this sparked the idea for Netflix.
Reed co-founded Netflix on August 29, 1992, with Marc Randolph in Scotts Valley, California. Randolph, the marketing director at Pure Atria, had previously co-founded a mail-order software company called MicroWarehouse. Reed and Marc used to commute together from their homes in Santa Cruz to Pure Atria’s headquarters in Sunnyvale.
Marc later gave a slightly different version of the Netflix creation story. According to him, he envisioned a direct-to-consumer DVD rental service after observing the shift in the software industry towards CD-ROMs and the rise of e-commerce. He then approached Reed with the idea, and together they tested mailing a music CD to see if it could safely reach its destination. Reed’s version, however, disputes Marc’s claim of a significant involvement in the idea’s creation, though Marc is still regarded as Netflix’s co-founder.
Reed invested $2.5 million of his own money into the startup, and by 1999, Netflix raised $30 million in venture capital funding. Two months later, the company introduced its subscription service.
Netflix went public in 2002 at an initial offering price of $15 per share, valuing the company at $300 million. After stock splits, Netflix’s IPO price would be equivalent to $1.07 per share today. By July 2020, Netflix stock crossed $500 per share for the first time, and the company’s market cap reached $230 billion by September 2020.
Missed Opportunity with Blockbuster
In 2000, with Netflix struggling financially and losing a considerable amount of money, Reed Hastings approached Blockbuster with an acquisition offer. At the time, Netflix had around 300,000 subscribers and was on track to lose $50 million that year. Hastings proposed that Blockbuster acquire Netflix for $50 million, with the promise to change Netflix’s name to Blockbuster.com and handle the online side of their rental business.
Blockbuster, under CEO John Antioco, dismissed the offer, thinking it was a joke. Antioco, who was reportedly amused by the proposal, stated, “The dot-com hysteria is completely overblown.” Of course, this decision would prove to be a major misstep, as just a decade later, Blockbuster filed for bankruptcy while Netflix continued its exponential growth. Today, Netflix is worth approximately $150 billion, with almost 200 million subscribers, making Reed Hastings one of the most influential figures in both the entertainment and business worlds.
Reed Hastings is married to Patricia Ann Quillin, and together they have two children. The family resides in Santa Cruz, California, where they purchased a modest home for $1.5 million in August 2013. In addition to their primary residence, the Hastings also owns a two-story penthouse apartment in Hollywood, which Reed bought in 2016 for $1.75 million from actress Charlize Theron. This was actually $1 million less than Charlize had paid for the property in 2007.
Reed and Patricia are also known for their philanthropy. In June 2020, they made a generous donation of $120 million to support historically black colleges and universities (HBCUs) in the United States. This contribution was the largest single donation ever made by a billionaire individual or couple to this cause. The Hastings’ donation included $40 million each to Morehouse College and Spelman College, as well as another $40 million to the United Negro College Fund, which provides scholarships for students attending HBCUs.
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